Updates on Four Consumer Discretionary Stocks - JBH, SGR, WEB, JIN

  • Nov 08, 2019 AEDT
  • Team Kalkine
Updates on Four Consumer Discretionary Stocks - JBH, SGR, WEB, JIN

Products and services that are considered non-essential for consumers come under the category of consumer discretionary. The segment is driven by sustained improvement in consumer buying and purchase behaviour. Demand in this segment is typically much more elastic, which means it can plunge very quickly in case of a decrease in income of consumers.

The benchmark Index S&P/ASX 200 was trading at 6,712.4, down 0.21 per cent, while S&P/ASX 200 Consumer Discretionary (Sector) was trading upward by 0.18 per cent to 2,654.0 on 8 November 2019 (AEST 12:47 PM). Here in this article, we are discussing four ASX listed stocks that are part of the consumer discretionary sector. Let’s zoom into their recent developments.

JB HI-FI Limited (ASX: JBH)

JB HI-FI Limited (ASX: JBH), a home consumer products retailer, is engaged in providing consumer electronic products including computers, televisions and software, in addition to whitegoods, small appliances, etc. The company also provides services in the areas of consulting and information technology. JBH is headquartered in Victoria, Australia.

Recently on 7 November 2019, JBH announced that UBS Group AG and its related bodies corporate became an initial substantial holder of JBH, with a voting power of 5.03 per cent.

Q1 FY2020 Sales and FY2020 Sales Guidance Update

Q1 FY2020 Sales Update (ended 30 September 2019):

  • Total sales growth for JB HI-FI Australia was 4.7 per cent (pcp - 5.3 per cent) with comparable sales growth of 3.7 per cent (pcp - 3.4 per cent).
  • Total sales growth for JB HI-FI New Zealand was 3.8 per cent (pcp - 4.0 per cent) with comparable sales growth of 3.8 per cent (pcp - 9.8 per cent).
  • Total sales growth for The Good Guys was -0.5 per cent (pcp - 2.3 per cent).

For the financial year 2020, the company reaffirmed its previously announced guidance of total sales of circa $7.25 billion, out of which JB HI-FI Australia is expected to contribute $4.84 billion, while JB HI-FI New Zealand and The Good Guys are anticipated to account for $0.24 billion and $2.18 billion, respectively.

Stock Performance

The stock of JBH was trading at $36.530 on ASX on 8 November 2019 (AEST 12:49 PM), down 0.545 per cent from its previous close. The company has approximately 114.88 million outstanding shares and a market cap of $4.22 billion. The 52 weeks low and high value of the stock is at $20.300 and $37.730, respectively. The stock has generated a positive return of 45.41 per cent in the last six months and 70.05 per cent on a year-to-date basis.

The Star Entertainment Group Limited (ASX: SGR)

SGR, formerly known as Echo Entertainment Group, is engaged in the management of integrated resorts with gaming, entertainment and hospitality services. The company, which acquired Sheraton Grand Mirage in a JV, is the owner and operator of properties like Treasury Brisbane and The Star Sydney.

Trading and Gold Coast Update

On 24 October 2019, the company released an update related to trading and expected earnings for 1H FY2020.

  • Group domestic revenue increased by 1.5 per cent year-on-year for the period from 1 July to 21 October 2019.
  • Normalised revenue for Group International VIP Rebate business went up when compared with the same period a year ago.
  • The company’s normalised EBITDA for 1H FY2020 is expected to remain in between $300 million to $310 million.
  • De-risking initiatives were implemented including annualised cost reduction of approximately $45 million by the end of 1H FY 2020.

The company has provided an investment proposal to the Queensland government in order to create substantial tourism drivers for the Gold Coast. The proposal has three elements including commitments around The Star Gold Coast Masterplan, and upgrades and expansions to GCCEC and The Sheraton Grand Mirage.

Stock Performance

The stock of SGR was trading at $4.730 on ASX on 8 November 2019 (AEST 12:51 PM), up by 0.425 per cent from its previous close. The company has approximately 917.32 million outstanding shares and a market cap of $4.32 billion. The 52 weeks low and high value of the stock is at $3.560 and $4.930, respectively. The stock has generated a positive return of 8.53 per cent in the last six months and 5.37 per cent on a year-to-date basis.

Webjet Limited (ASX: WEB)

Webjet is a digital platform for travel bookings across New Zealand and Australian region. The company deals with business to consumer and business to business clients. Its B2C division includes the Webjet and Online Republic segments, while the B2B Travel division consists of WebBeds, which has the Lots of Hotels, Sunhotels and other brands, providing coverage across several regions.

On 8 November 2019, WEB unveiled that the voluntary escrow restrictions on 1,059,679 ordinary shares will be lifted on 22 November 2019. The voluntary escrow arrangements were issued in part consideration for the acquisition of DOTW Limited.

On 24 October 2019, WEB presented at the Goldman Sachs 3rd Annual Tech Day, highlighting the company’s focus on the Asia-Pacific region.

Customers in Asia-Pacific

  • A multi service app in China with USD65 billion market cap
  • The largest air ticket and hotel provider in India
  • A Japanese travel conglomerate with more than 300 branches in Japan

During FY20, according to the company, APAC is on track to deliver the most bookings by region.

Stock Performance

The stock of WEB was trading at $11.500 on ASX on 8 November 2019 (AEST 1:52 PM), up by 0.966 per cent from its previous close. The company has approximately 135.6 million outstanding shares and a market cap of $1.54 billion. The 52 weeks low and high value of the stock is at $9.980 and $17.190, respectively. The stock has generated a negative return of 31.39 per cent in the last six months and a positive return of 7.55 per cent on a year-to-date basis.

Jumbo Interactive Limited (ASX: JIN)

Jumbo Interactive Limited, headquartered in Queensland, Australia, operates as a retailer of national jackpot and charity lotteries on the online platforms. The company held its 2019 annual general meeting on 24 October 2019.

CEO Address at AGM

Mike Veverka, the CEO and Founder of the company, highlighted JIN’s performance during the financial year 2019 ended 30 June 2019 unveiling a 64 per cent increase in revenue from continuing operations to $65.2 million. Additionally, the company’s NPAT went up by 124 per cent to $26.4 million in the reported year.

He also discussed new software platform, a game-changer for Jumbo, with which the company is reporting

  • Improved performance
  • Faster response times – 33 tps
  • Current capacity – 150 tps
  • Sleeker user interface
  • Immediate impact

By FY2022, the company is expecting $1 billion in ticket sales on the Jumbo platform, unveiled Mr Veverka.

Stock Performance

The stock of JIN was trading at $20.210 on ASX on 8 November 2019 (AEST 12:58 PM), down by 2.083 per cent from its previous close. The company has approximately 62.37 million outstanding shares and a market cap of $1.29 billion. The 52 weeks low and high value of the stock is at $6.478 and $27.920, respectively. The stock has generated a positive return of 29.22 per cent in the last six months and a positive return of 183.34 per cent on a year-to-date basis.


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